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tv   Closing Bell  CNBC  January 29, 2018 3:00pm-5:00pm EST

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you have to be careful a lot of money at stake. >> let's look at the week's market markers a week full of them starting with big profit reports all week long a fed meeting, a state of the union address and, finally, a new jobs report. that is a lot of information for the market to digest we'll help you through it all week long. >> we will >> yes, we will. >> thanks for watching "power lunch. "closing bell" starts right now. ♪ hi, everybody, welcome to the "closing bell. i'm kelly evans at the new york stock exchange. >> i'm scott walker in for bill griffeth. >> we're watching what could be a major development in the nafta talks. >> and new information on what could be the biggest tech deal ever. >> we start with the rising ten-year the interest rate crossing the 2.7% marker earlier. what does it mean for interest rate sensitive stocks? dominic chu live at headquarters. >> the highest since april 2014.
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one of the big ripple effects is utilities. take a look at this chart behind me we're seeing the death cross that's what some technicians call it when the shorter term 50-day moving average of a stock or etf falls below longer term trend, the 200-day average we're seeing it with the excel, the spdr sector utility, xlu this does not portend bad things but something to pay attention to it's not the only that we're keeping an eye on. we're seeing some action play out in some parts of the market. namely in the real estate stocks the vanguard reit index is sinking down to multi-year lows. as we take a look at what's happening with this, it's already in correction territory, off about 10 plus the highs we saw a couple years ago we'll take a look at another part that's perhaps a brighter spot while all these guys are making these multi-year lows, one
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that's not is the consumer staple sector. this is actually just a stone's throw away from all-time highs would you believe it or not, more than half of the index members of this particular etf are actually up double digit percentage amounts over the past three months something to pay attention to. we'll boil it all, scott and kelly, down to the ten-year note yield. everyone watching whether or not we'll see the interest rates continue to rise or at least give a little relief for right now utilities appear to be taking the brunt of what's happening right now, guys. back over to you. >> that's where we'll continue with, dom. thanks. a lot of the market is focusing on the ten-year ahead to the federal reserve meeting tomorrow let's get to steve liesman. >> markets are struggling with a tug of war here when it comes to the outlook. higher interest rates on one side but also higher economic growth the ten-year yield taking out highs not seen since 2014, passed through the 270 level, came down a little bit since then markets wondering if a
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three-handle is the next stop. forecasters are nudging up their forecast to put a three-handle on gdp growth this quarter and maybe this year after friday's gdp of 2.6%. several economists upgraded their forecast for the first quarter to 3%, noting that inventories and trade, they took away almost two full percentage points of growth jpmorgan writes, a shortfall in accumulation actually bodes well for the current quarter, we thus raise our forecast from 2.5% to 3% more growth could mean more fed rate hikes this year take a look at the probabilities. a virtual lock on a march hike june is more than 50%. december, 53%. so, those three rate hikes now a new addition, this possibility of a fourth hike rate, four in one chance being put on it. not the level but the speed of reaching higher rates. interest rates have shot up pretty quickly at the same sometime they remain relatively low and corporate rates, which are key for the economy, are up
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only modestly so far >> that's an important point steve, stay right there. chime in, if you will, when we get to our "closing bell exchange." joining us quency alongside kenny of o'neill securities and rick santelli checks in from the cme in chicago welcome, everybody kenny, let me retrace to the death cross we were talking about in utilities as a way at looking what's happening in utilities, are question down because of interest rates or signals? >> i think it's a division interest rates are at the top of the game not just u.s. interest rates but what's happening around the globe as you mentioned earlier, as you mentioned coming into this segment the death cross is certainly a technical signal that is giving people reason to pause, reason for caution. with everything that's gone on this week with the state of the union, nonfarm payrolls, all the macro data on top of the earnings, it's creating a reason for people to step back.
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we've had a mads ive move in the market not only this month but from the last -- last quarter up till now. we're up 17%, 18% in a short three months i think people are now taking a step back and saying, let's just take a breath here >> rick, i woender if you think this level 270, let's call it, is a line in the sand of some sort if you get above that and then you start maybe even moving higher than that, the stock market starts to have an issue >> i don't know where the line in the sand is 270 in my opinion doesn't seem too high for rates i think it's been more than orderly. we've come 28, 29 basis points since we settled last year i think a lot has to do with the fed. consider that on the 4th of year, 4th of january 2018 we made the flattest read on ten minus twos basically at 50 basis points we're at 57 now. the short end is still in control. as a matter of fact, today 30s
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minus 10s, the flattest since 2008 when you look at what's going on, it's part policy, part the economy and i think the fed is the biggest dynamic. i feel pretty confident we will test 3%. i think the issue is when and how aggressively i wouldn't say we're done with the low 2.60s. that's a fallback and i think we'll test it before we see any zoom, zoom, zoom close to 3%. >> you're saying we have to go well over 3% and also the speed matters before this is important for the stock market >> yeah. the velocity in any move, whether it's commodities, whether it's interest rates can give the market, the equity market jitters if you see the two-year yield moving up as well, that's a signal that the short end of the yield curve cease growth it sees -- and in essence, it embarrasses the move up. the one thing about the ten-year moving up quickly, remember, yes, even though we're seeing
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german yields move higher, french yields, even japanese there was actually a little movement, insurance companies, pension funds globally will start coming in and rebalancing and take off some of that move higher this is something they have been waiting for because it's very healthy for them irn i think you're going to see that fairly soon. the market doesn't like speedy moves up it makes them nervous and jittery. the fed is extremely important in their statement coming this week whether or not the market thinks the fed is behind the curve is a big issue. >> richard fisher with us on "halftime" last week who made a prediction of four rate hikes this year. markets way offsides for that. you showed what people are predicting i forgot the number you had up there, but it was miniscule compared to the other predictions. >> it's not quite a football game in this case, the market is offsides but it's getting onsides. that's been a process. and the market has time to get
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onsides. and i think rick would agree with this in that you have to do three before you can do four that's a mathematical necessity here the first one comes in march the second one in june the market has time to adjust in a way that won't be too difficult here to incorporate the outlook here that 18%, that one in five chance of that fourth hike, that's a new number that's been coming by the way, the outlook for growth has changed pretty quickly. it's not all that surprising that the outlook for rates has changed quickly along with it. and there is actually shown by the morning's report not a lot of inflation out there no real hurry for the fed to get there. we might have more of a disconnect between these interest rates on the risk-free side as in the treasury side and the corporate side you have this corporate tax cut and one use of that money could be to pay down corporate debt. you might not see the interest rates paid by corporations go up all that much if they begin to
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pay down the debt and reduce the supply of corporate debt out in the economy. >> i was going to say between june and december is a good six months of macro data not only u.s. but global therefore, that fourth rate hike -- actually, would be the third, would happen in between june and december and the fourth one coming in december i think you're right, the market isn't necessarily prepared for four, at i think we'll get four this year because i think you'll see an uptick in inflation sooner than what everyone is expecting. >> the question is if rates are rising for the right reason -- >> exactly. >> -- and the market may be able to digest it a little easier than if things start to get away from us. >> as she said, the speed -- >> the federal reserve owns a sports car they own a zo-6 corvette that can do 195 miles an hour the problem is they're not comfortable driving at full speed. my guess is they'll drive as fast as they feel safe this game, this parlor game 3, 4, you know how many they're
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going to do by how much kick the economy has. >> give them a chance, rick. they've been on a moped. they have to get in a sports car, they need to drive it around the block a few times. >> they certainly have >> thank you. >> we'll see you soon. a developing story on the nafta talks. let's get to cnbc's kayla tausche from d.c. >> reporter: president trump is planning to ask for an extension on the timeline for faf nafta talks according to his chief negotiator who said that to reporters in montreal. trump must send a letter to congress by april 1st requesting the extension. the current legal authority to renegotiate nafta under a quicker timetable expires on july 1st the same day as elections in mexico it's the clearest sign from the administration yet that talks could extend into 2019 as industry executives said was possible negotiations are likely to stall until mexico's new president is
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in office and that inauguration is not until december 1st. the extension by law is three years and comes as ambassador lighthizer expressed frustration with the glacial pace of talks so far. >> i'm hopeful progress will accelerate soon. we'll work very hard between now and the beginning of the next round and we hope for major breakthroughs for that period. >> the next round begins february 26th in mexico. all three countries today expressing cautious optimism on negotiations with lighthizer saying the u.s. is committed to moving forward kelly? >> kayla, i'm not surprised he's frustrated if the extension is a three-year extension that's beyond the president's first term in office. >> well, that was an extension that was put in place by statute back in 2015 when president obama was negotiating the transpacific partnership and republicans in congress wanted some checks and balances.
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they wanted a so-called fast track to renegotiate some of these deals if they didn't like where they ended up. now that process is being put into place that republicans themselves negotiated. that's a three-year extension by law. we're trying to figure out if it's possible the president could request something shorter but in the law passed by congress, it is three years. >> a twist of fate, thank you. let's get to another developing story we're watching out of washington. fbi deputy director andrew mccabe stepping down eamon javers has the latest. >> reporter: the white house is offering a relatively low-key of the news that the deputy of the fbi stepped down a little unexpectedly today he was expected to retire later in the year but today the announcement came that he's going to be leaving the fbi today. the press secretary here, sarah huckabee sanders said the president simply had nothing to do with the official decision making surrounding that. here's what she said in the briefing room a little while
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ago. >> look, we've seen the numerous reports as all of you have any specifics, i can tell you none of this decision was made by that of the white house any specifics i would refer you to the fbi >> reporter: sanders referring reporters to the fbi saying the president didn't make the official decision but the president has been publicly very critical of mccabe, who he suggests is biased against him and biased possibly in favor of hillary clinton back during the investigation into hillary clinton's e-mails. here's one tweet that the president put out about andrew mccabe back in december saying, fbi deputy director andrew mccabe is racing the clock to retire with full benefits. 90 days to go. here's our understanding of right now of his retirement status it looks like he'll be placed on leave officially, even though he's departing the fbi today, and that will edge title him to his full retirement, which kicks in in a month on or so time. he will get the retirement
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benefits the president was tweeting about we may get more news about this this afternoon sarah huckabee sanders said that the fbi may be making a statement later on today we might get a little more context here around exactly why this news came today >> interesting stuff eamon, thanks so much. eamon javers from the white house for us cnbc alex sherman breaking news that dell is considering a sale to vmware in what could be tech's biggest deal already. dell already owns 80% of vmware. it would give dell shareholders a way to profit without taking dell private alex sherman joining us with more details on the story he broke earlier. >> yeah, so who are those dell shareholders they're michael dell and silver lake, the private equity company that took dell private back in 2013 then dell got a lot bigger when it bought emc. emc owned 80% of vmware but the rest has continued to trade as a public company so, the news today is that dell
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would re-emerge as a public company by combining with vmware why would they do this two reasons come to mind initially. one, it's a way to take care of their $50 billion of debt. you get liquidity by going public in essence, you become a public company, you can sell down, pay off some of that debt. secondly stshgs gives silver lake a way to monetize their investment in dell by becoming a public company of course, they can sell those shares on the public market. those two reasons right away come to mind but this is just one option of several that the dell board is looking at they will make a decision on which one exactly to move forward with in the coming weeks we're told >> ail lex, thank you. joining us to talk more about this is angelo zino who joins us by phone. when the first reports came out that dell might buy vmware, i know you had your price target up to 160. why is vmware selling off more than 13%, below 130 on these
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reports it could go the other way. what do you make of it >> yeah, i mean, listen, if you're a -- if you're a vmware shareholder, this is the last thing you want to see, to be quite honest when you look at vmware, this is a company wall street absolutely loves and an easy company to love, quite frankly. it's a company growing at double-digit pace here looking at a company with very little debt. they've got, you know, margins that are through the roof, especially relative to that of debt so, it's a great name to love. and an easy name to love that being said, i mean, skok down 13% plus today. i think on the fear that, listen, if vmware were to taken over dell here, you know, it's just not as nice of a company to be holding >> right because dell has high debt levels, obviously, they're not as attractive on that profile you just mentioned for vmware. how likely do you think something like this is
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and why then -- i mean, is the idea to just own vmware on the prospect of a dell takeout then? if the company looks so good but it gets folded in anyway, all you've done is gotten the buyout price, right >> yeah. i mean, essentially. but when we look at this right now, alex made a great point, the reason dell is looking into this right now is for a number of reasons necessity have a debt level north of $45 million, amid rising interest rate environment and tax legislation that isn't favorable for a company like dell it's an overheatstock market it makes sense for dell to kind of be looking at their options a reverse kind of option here with vmware makes sense that it's a lot less costly all that being said, if you're a vmware shareholder, you have to watch out. i think it's also a great opportunity to buy the shares
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if -- you know >> all right it's a great point dell, one of the few big companies that will get hurt by the tax bill a thanks for your time. >> thanks for having me. >> again, 13% drop in vmware shares. >> a lot more ahead on the "closing bell." >> announcer: straight ahead, iphone fears reports of a production cut. with the stock down today, is this the time to take advantage and buy in if you missed the apple raylly. a big pop for a soda stock after a big deal in the industry what's behind keurig green mountain's buyout of dr dr. pepper/snapple "closing bell" live from the new york stock excngisacin o nus.hae bk is the monolithic view of emerging markets obsolete? at pgim, we see alpa in the trends,
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now is welcome back. check out shares of lockheed martin the u.s. defense contractor helped by higher sales from the f-35 fighter jet program and forecast in rising earnings.
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the race continues for amazon's hq2 with the field nir nair rowi narrowing to 22 cities >> a lot of people were a bit surprised newark made that top 20 list but the hope is they made amazon an offer it can't refuse joining us from trenton, the 56th governor of new jersey, phil murphy. his first appearance on cnbc good to have you with us, governor >> great to be here. >> let me ask you about that $7 billion in incentives the state has offered, $7 billion. are you on board with that package signed into law by governor christie? >> the answer is, yes. we've been quite critical under the christie administration that tax incentives is the only weapon we have to attract companies, only big companies. i have to tell you, this is a
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once in a lifetime opportunity it's not the only element of the opportunity in newark by a long shot it's public transportation, communities that millenials want to live in, public education, higher education we think the tax element of the package is an important one. >>. >> let me ask you, as you know, as you're finding out as you get settled in there, a lot of needs in your state, a huge pension obligation you have a lot of homeowners that would love tax breaks of their own. $7 billion to a company with $140 billion or so in revenue. is that the best use of the state's money? >> well, it's not an either/or reality. we need to deliver property tax relief we need to deliver relief to the middle class the middle class has been ravaged over the past eight years. we'll do that fully fund public education, among other things, invest in infrastructure but the prospect of a company that could create a real
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prospect, 50,000 jobs on their own and another 50,000 or more ancillary jobs in the economy, those are opportunities that don't come along every day by a longshot so, we think this is a good investment in our future it's not an investment at the expense of other investments we need to make, but we think this is a smart one. >> governor, it's kelly in new york thank you for joining us just as you came into office the president did come out with his tax plan that highlighted the tax burden in new jersey, new york and connecticut i know you came in promising more than $1 billion of tax increases, but are you looking at -- are you looking at cutting taxes instead in new jersey going forward as a result of this >> again, kelly, the main challenge for us is to rebuild and reinvest again in our middle class and in those who aspire to get into the middle class. they've been left holding the bag for the past eight years
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we're going to do whatever it takes to make sure we get that middle class in our state back up on its feet this tax bill from washington is a horrific law it's political it takes it out on the middle class. i think it's been wildly written at the end of the day, years from now, 80% of the benefits will go to the top 1%. we're going to do everything we can to push back on that, whether it's legal or creative juices trying to find out ways -- we announced a couple weeks ago, by for example, we want to pursue a precedent the irs has set in many other states to convert property tax payments into charitable contribution payments and, therefore, get a deduction. we'll do what it takes to push back on this and provide real relief to the middle class. >> governor, it's scott wapner do you really believe that amazon has yet to make up its decision i ask you that in the spirit of
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a comment made by the nyu professor scott galloway on this network last week in which he suggested it's ridiculous to think -- for any of these cities to think that amazon hasn't already made up its mind he's going to pit these cities against each other, go to the one he really wants and say, match what this xyz city is willing to do to get the best deal for itself possible but the decision's already been made >> listen, i have no way of knowing that i take them on their word. i believe their process is real based on every interaction we've had, that's the evidence we have maybe more broadly beyond amazon, i think this is a great testament to newark and new jersey more broadly. this is a state that was silicon valley before there was a silicon valley we had thomas edison and alexander graham bell and bell labs and all that goes with it so, i think that this is a real signal that the innovation economy that used to drive this
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state is alive and well and nowhere better does it represent that than newark, which is a great signal whether we win, lose or draw. >> that's a tall order governor, thank you for joining us governor phil murray with scott cohn more than half an hour to go here dow down 129 points. we tipped lower the s&p is down 14 that's about a half percent decline. apple shares down about 5% over the past week and another report out of japan could spell more trouble for the tech giant and its suppliers after this
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welcome back to "closing bell." i'm seema modi with this market flash. the bitcoin investment trust is spiking as its stock split into effect today gbtc issued this stock split to bring down price after a massive surge in 2017 when it gained about 1300%. scott, back to you >> seema, thank you very much. general electric is moving higher today after mario told us he's taking a position in that company. >> i don't care whether they split or not the answer is, you're the new ceo, you got a new deck, you're going to start doing what is right in a competitive and global economy you're going to innovate so, i have no problem with ge. >> how big of a position do you
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take in something like ge? >> we have a tiny position, maybe $40 million, $50 million we're just starting. eventually we would love to own the company. >> mike santoli is here with some reaction. every analyst we talk to now seems universally bearish. no one wants to go near this thing. everyone is fed up and frustrated and is this the right time for a guy like mario gabelli to walk in >> it's profoundly contrarian. only 30% of the sell side is recommending ge. i guaranteeit's an all-time lo going back to the dawn of the stock market basically with ge now, the stock has made a couple of attempts to made a stand at $20, as $18, now knocking around16 if you're someone like mario who tries to be long-term deep value approach and contrarian, how many mega cap stocks do you have in this kind of market you can make that kind of a play not that not
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if you believe the $1 share? earnings is real, can you ballpark it and say, maybe that's the low and you go from there. the point i keep making about ge, all the businesses ge is in, look at the comparable companies in all those component businesses and they all have very generous valuations right now. 20, 24 times, 3m or honeywell or general -- >> well, it's -- >> you could say >> he was complimentary about flannery, the ceo and how nice to call $40 or $50 million tiny. >> i thought about that, too it's a tiny percentage of gdp and a small percentage of what mario wooe mario wields over there. >> he's seen enough, whether it's the bottom, the exact bottom - >> that's the point, right he's not saying it's the impact bottom just in the general area of, okay, i can see where the fundamental value might come through from here. >> and it makes you wonder
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because we won't know until mid-may other investors who might be getting in, the 13-d type investors thinking the same thing. >> stock definitely moved on that. let's get over to sue herera. here's what's happening. long-time congressman rodney fr frelinghuysen announcing he won't seek re-election he joins a growing roster of gop veterans who are not running. former congresswoman corrine brown reporting to prison this morning. she was sentenced to five years for fraud and conspiracy the 71-year-old brown is appealing her conviction. 13,000 u.n. workers in the gaza strip went on strike to protest plans by the u.s. to cut aid to palestinians. more than half of the 2 million people in gaza where
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unemployment runs at 46% are dependent on that aid. and variety reporting preliminary tv ratings for the grammy awards last night fell by more than 30% from last year to come in at 17.6 million but cbs also said it did hit a record on its all-access subscription video on demand and live streaming services. >> i wonder if that's because golf ran so long, if you wanted to see any red carpet, you had -- we were flicking around i was looking for the outfits. >> i think a lot of people were doing exactly the same thing exactly the same thing, kelly. >> we'll see they didn't give us the hour-by-hour count. >> they probably will break it down. >> i expect. see if people were tuning in dwardz the end, too. thanks, sue. see you next hour. >> thanks. we're in the home stretch on this monday on wall street dow is down 120 points a lot of focus on interest rates as you heard earlier in our
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program today and the other major averages are down as well. s&p, nasdaq and russell. still ahead, apple is reportedly slashing its production target for flagship iphone x after a slower xan n.pected holiday see we'll tell you what it means for the company's stock and strategy going forward. is helping build the new new york. starting with advanced manufacturing that brings big ideas to life. and cutting-edge transportation development to connect those ideas to the world. along with urban redevelopment projects worthy of the world's top talent. all across new york state, we're building the new new york. to grow your business with us in new york state visit esd.ny.gov. so that's the idea. what do you think? i don't like it. oh. nuh uh. yeah. ahhhhh. mm-mm. oh. yeah. ah. agh. d-d-d... no. hmmm. uh... huh. yeah. uh... huh.
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welcome back dow is down 137 points we lost more altitude this hour. nasdaq down 35 russell down 7 pretty consistent across the board. 0.5% declines across the board to begin a string of gains in 2018. apple reportedly cutting iphone x production for the first three months in half adding to growing concern over weak sales of the phone. let's get over to josh lipton. >> kelly, apple is now telling its suppliers it will slash its iphone x production target for the first quarter by half to 20 million units. that's according to a new report from the nikkei, which didn't cite a source in its story still the paper says weaker than sales results during the holiday season are to blame here this follows a similar downbeat note from jpmorgan
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analysts there recently talked about signs of what they called weakening iphone x orders. they said high-end smartphones are clearly, in their words, hitting a plateau this year. investors seem to be paying attention. so far this year apple stock is basically flat that's compared to a 7% jump for the market on the other hand, rbc tells us he's not worried he says no apple suppliers that he covers are suggesting production cuts that are out of the ordinary they are in line with historical seasonality. in other words, there's always a sequential slowdown between the december and march quarter, but he doesn't seem any cause for alarm. at least in what he's hearing from tim cook's supply chain in addition, he notes rbc's consumer survey in china indicates a strong iphone x mix with more than 60% preferring that flagship device scott, back to you >> josh lipton, thank you very much apple stock has dropped 4.9% since january 22nd, wiping out
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$45 billion in shareholder value over that period shus investors be concerned apple and the iphone is losing luster here to debate that is ross gerber ross, how much do you think is in the stock and that's why it's had this pull itback >> it is in the stock. they do this every quarter how many times can we do this with analyst and production slashing, this and that. they're never right. we don't know what the real sales are, nor does anybody. what we know is the iphone x is much more expensive than the other iphones and that does affect demand. tim cook by splitting -- having two phones for sale, essentially, i think, also split his market what we've seen is that the higher end aspirational buyer is spending the extra money for the iphone x, but many other millenials are very conservative with their money and thaey're opting to keep the phones they have and incrementally upgrade to 8
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many are still using a 5 or below so still so much opportunity for iphone. >> ross, we know you're a shareholder. eric, what about you and what do you make about these reports >> 50% i predicted for a while that the "x" was not going to sell and these numbers correlate with that that's a big hit that's going to affect the stock in a big way i think you're going to see more revisions, certainly from suppliers. i think apple will revise their numbers in time. look, i mean, the bottom line, when you look at the "x" phone, what's so special about it even apple - >> that's not fair the phone is amazing come on. >> let me address it you had your chance. let me talk now. when you look at grammys, they advertise for the "x," what was special? unicorns and aliens. so, if apple is relying on unicorns and aliens to grow, that's why you're looking at 50%. steve jobs would say, go back to
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the tool shed. >> eric, you guys are not shareholders then? >> no, not a chance. >> ross, what about his points >> that was the best apple ad i've seen for so long in the grammys. i look at animojis if you don't look at snapchat what kids do all day long, apple is addressing that that's smart for them. second, apple is not an iphone company. it is a very diverse company and it's all about getting user handsets out there to make services they're selling more ipads than most people expect and more computers than people expect even though there might be an issue with the iphone, let's take into fact that margins are bigger and the phone is more expensive. more likely they'll surprise on the upside with earnings even though sales numbers might not reach where they expect. >> the biggest question is, if
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they guide lower, how substantially they may guide lower and what they be the impact is going to be in the stock, which has already been pulling back leading into the number >> i think they always guide lower. i think at 17 or 18 times earning with the potential to buy back 10s or 15% -- >> what do you mean always guide lower? >> they always guide their numbers lower. they always say -- >> i'm talking about cutting guidan guidance they don't always cut guidance. >> apple, the same valuation as ge right now on a pe multiple and it's growing so, don't you think in a marketplace where netflix is trading at 10,000 times earnings that apple is a fairly compelling investment? that's where we stand as far as risk/reward. i think it's very compelling for apple. >> eric, last word >> well, look, i mean, clearly he's invested heavily. it's obvious with these
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arguments. >> yes, of course. >> i think they have a big way to fall. and i think it could be 15, 20% when you're seeing the "x" phone -- by the way, the iphone is the largest portion of revenues he's saying it's not that's silly you're talking about a big hit coming investors are going to be hit and i think you have to be careful about investing. this is no longer a growth stock. this is a staple stock it's still a good company but it's not a high grower and the iphone is going to -- is facing big problems >> guys, thank you both. >> thank you. 15 minutes left in the trading session here stocks are near the lows of the day. the dow is down 145 points 26,472. >> there's no late day rally coming to the rescue here yet. 15 minutes to go paypal taking hit on word of a new competitor in the sector. plus, is the trump white house about to pull the em nint
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a lot has to do, people say, with what's happening in the interest rate complex. you have the ten-year right around 2.70. that's making people awfully nervous. >> it's hurting the utilities. talking about the death cross earlier. a little skittishness about that. >> bond proxieproxies, these bond-sensitive areas let's get a check on some of today's -- >> let's do. >> are you doing that? >> no. looking at you perfectly framed >> thank you softbank is working on a new digital payment system toll rival paypal, also compete with a alibaba ten cent pay paypal is trading down on the news and starbucks is trading lower
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after they changed the share saying chooib's growth is not enough to offset slowing u.s. sales. take a look at starbucks and they're down about 1.23%. >> still more pain since that earnings report last week. about 11 minutes to go dow down 165 we're near the lows of the day we'll keep an eye on the s&p vix is up 13 transports weaker, everybody else lower. >> we're watching the ten-year closely. everybody is down here and the impact it's having on, as kelley said, on interest-rate sensitive stocks, utilitiesings telecoms and elsewre 'ldiusinwoinutes [ click, keyboard clacking ] [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ]
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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. breaking news on maxim integrated products. alex sherman is back with new details. >> another big tech deal potentially in the works here. the japanese semiconductor renesas in talks to buy maxim integrated this could be a $20 billion deal or so. maxim tried to sell itself
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several years ago. that sales process didn't go anywhere renesas has been vocal about wanting to buy semiconductor business renesas over $20 billion in market cap and maxim approaching that another tech deal in the works here with these two large semiconductor companies potentially coming together. nothing is imminent. no deal may happen here, but the companies are in talks >> alex, i assume the japanese buyer wouldn't have the kind of pushback a chinese buyer has had, correct >> for sure. of course, there would be regulatory issues involved here, but we have seen other cross-border semi deals between japanese companies and u.s. buyers, most recently the toshiba memory unit business which was bought by a consortium you're right, chinese steel would be a much different story. >> m achaxim popping. >> you have six minutes to break
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another story. >> i'll let you guys know. >> alex sherman back at headquarters. shares of dr. pepper/snapple snapping on news it will merge with keurig green mountain leslie has more on these details. >> that's right. a refreshing deal for share shoulders but analysts' thirst not quite quenched it combines dr. pepper/snable with keurig/green mountain which is owned by jab. one analyst writing they are struggling to understand the rationale but they also add many consumer companies have benefitted from a long-term controlling shareholder that can execute a, quote, grand plan over time. in the meantime, the executives told "squawk on the street" that the deal is largely about distribution >> how beverage brands are born. they're born in small outlets, vending convenience where people
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buy them one bottle at a time. that's hard to do. you need a very, very sophisticated distribution system that's exactly what dps has. so, we're able to match that with our strength, which is in traditional grocery. >> now, one of keurig's partners, dunkin' slipping on today's news after j.a.b. sherman told a german newspaper this month that they are raising new capital. they speculated dunkin' was a prime takeover candidate but with this keurig can re-enter the market and expand even further. >> thank you very much coming up next, the closing countdown wi t d jt f thheowusof the lows of the day.
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that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online. we're back on the floorof the new york stock exchange. time for the closing countdown stocks are a little off the lows of the day but a lot of the focus is on the ten-year yield which has been at its highest level in a couple of years pushing around 2.70, sitting around 2.69 making some investors nervous about the speed in which rates could rise from here and the impact on the overall market i'll show you the three major averages everything is down across the board. dow was down by 165, 170 earlier. it's peeled a little off that. it's down 136.
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in terms of the big stock stories of the day, apple reports its earnings on thursday after the closing bell that stock has underperformed the market this month for certain. it's down another 2% today on some reports out of japan that apple is telling its suppliers it's going to halve apple iphone production in the current quarter. that has some investors selling that stock today i'm here, as always, with bob pisa pisani we talk about stocks but this is really about rates. >> big week here a lot of movers. state of the union, jobs report, earnings huge, but everyone is focusing on the fed meeting for exactly what you talked about. rates starting to move up rapidly. it's the velocity of change worrying people. you look at rate-sensitive sectors, all down more than 1% you think on a great day like today, all the banks would be up, but we're seeing some resistance, even to the idea that banks will be better. they've been regional banks on the weak side. i think the big market mover is let's see what the fed says about what they're seeing about
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inflation. wage growth is there, definitely >> you've had these interest rate sensitive selling off, that death cross, big talk about utilities. thank you, bob closing bell state street global advisers second hour of "the bell" with kelly. welcome to the "closing bell." i'm kelly evans. dow dropped 180 on the bell. could still be moving around we'll keep an eye on it. exact same proportion as to the s&p today. dow down 26,435. dropping 181 the s&p down 19 to 2853. nasdaq and russell down 0.5% nasdaq down to 7466 and russell back to 1598
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interest rates moving the other way. so it is volatility index, so is the dollar we'll talk more about this with cnbc senior commentator michael santoli, and paul hickey checking in and nancy tangler from heartland financial leading the dow, goldman sachs, caterpillar was the big laggers in the blue chips. there's goldman up 1.5%. caterpillar down 2.5%. in the s&p, dr. pepper/snapple was up 21% and wynn resorts down 16%, that makes for a 20% two session. we'll have more on that. let's get back to the markets. we went from being down 100, going out on the lows here what do you think is behind this >> clearly, you could have guessed coming into the week there was going to be pent-up selling, your basic backup after a tremendous run pretty much had to have a down
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day at some point. i know this is the weakest day in the last 100 trading sessions because before today we went 99 straight sessions without the s&p 500 being down at least 0.6 of 1%. >> 99? >> longest in history. we did go down about that much, a little more, it looks like, and got back to levels that were last reach, in fact, first reach on friday morning. so, we kind of gave up friday's little pop i don't necessarily think you have to make too much of the yield move we'll talk about that later. it was an obvious excuse to say, okay, let's back off a little ahead of the fed meeting. >> we talked about how stretched everything's gotten. what does today do to put things back in check for you? >> i don't think one day like today would really bring things back but i think we tend to see this late in the month in prior recent months, too, some rebalancing as, you know, people are overweight equities, rebalancing to fixed income. treasury yields were up today, but people are just taking money
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off the table at the end of a month and a very strong month at that >> nancy, anything you'd add on the correction we see here today? >> i called for a correction in july, so either i was super early -- i'm hoping we're going to see some -- you know, just some evening out and a controlled brush fire would be the way i'd like to see it just so that we could clean out some of this excess in the market >> i'm glessing, nancy, i'm guessing when you called for a corrections, you didn't mean for a correction of 0.7 of 1%. you're probably talking of something more is this the start of something more, you think? >> yeah, i do hope so, actually, because i think that having done this for 30-plus years, this is what you need. i think everyone knows that and is just waiting for it the problem is after the rebalance, and i think you're right about that, paul, is that then we see the money come right
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back in. we've only gotten a couple days of selloff and we never get the full correction. i think we really do need that i doubt we'll get it during earning season, though. >> let's talk about the move in interest rates, which was a focus today. you woke up this morning, 2.7% on the ten-year interest rate -- on the ten-year yield. we haven't seen that since april of 2014. mike, it's a round number, 2.7%. is there a larger significance to it? >> i don't think this particular number is of significance but the idea we're perhaps moving into a new higher range for yields, even though everyone seems to expect it or predict it, it's something the markets have to adjust to. not because it radically changes the cost of money, but just because we've been anchored at low levels for so long, i think you have to look and say, look, we know what's been working to have the stock market soar almost every day yields contained, dollar going down both those things changed today so maybe it's an excuse to sort of have a minor reversal in some of these trends. >> what do you think, we're just
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below the 2.7% mark now. does it keep climbing from here? the dollar index up 0.3 of a point. the vix up 2.5%. vix over 13. what are these things telling you? >> i think 2.7% on the ten-year is still extraordinarily low i mean, it was 70 basis points higher the day after lehman's bankruptcy at that point that was like our financial armageddon, everyone rushing into the safest assets we're still at very low rates in interest rates and i think when these increases are still now a function of economic growth and that's what the market is anticipating interpreting it at throughout this bull market, rates are higher, the market goes higher. when rates pull in, the market goes lower i don't think until we get up to 3%, even a little over that, it's a big problem for the market at all. >> one of the casualties was the utility sector the s&p utility sector down more
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than 1%. that's why we're talking about a death cross. it means when index falls below the 200-day. that happened in the utilities today. do you think that's a factor contradicting to the weakness here >> i think -- i think so, kelly. i'm surprised that anyone's surprised that electric utilities are not going to be the place you want to be in this environment. first of all, valuation levels are pretty high. second of all, it's not the right fundamental market with rising rates for this group. i do think that we'll see some moderation in the ten-year as corporate cfos start repatriating cash back into the u.s. i would want to do it at these levels, particularly with the dollar i think it will put some upward pressure on the dollar and downward pressure on rates and also will be good for stocks i don't think anybody's thinking about that right now i think that is going to have a profound effect in the next couple of months. >> you mentioned you avoid
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utilities, nancy, as an investment right now what do you like, where do you think the best place is to put money? >> yeah, so we're bottom-up investors. we think with the decline in the correlation amongst individual stocks and the s&p 500, we think it matters a lot which stocks you own and which sector so, while we generally like -- we still like the pharmaceuticals. that's been a stealth outperformer we are outweight to buy yoe and pharma we have modestly overweight to technology and industrials but it's really the underlying stocks we're most concerned about. these would be the beneficiaries of technology. even if you're not a believer in tech as a sector, i'm talking about old-school companies like home depot and boeing and mcdonald's and -- i can't even think of the others off the top who have benefitted -- federal express. >> i was going to say boeing might be old-fashioned but it has a growthy multiple tamped to it
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we bought it about 100% ago and we still think there's room in terms of what they're doing with the supply change and services business same with fedex. we think these companies have used technology, walmart, to their advantage. and they're leveraging it. that's the story that we're playing. >> mike real quickly, because she's talking about amazon-proof picks. do you think that's behind the deal dr. pepper/keurig cold mountain, scale with retailers, is that -- >> i can see the conceptual distribution logic for it. i also think you have to consider that this is a different type of entity in terms of who owns keurig green mountain right now i think the back doorway of getting liquidity for that business and maybe putting some assets together that didn't fit with the rest of the family business i don't want to generalize off this deal, but i do think what you're seeing -- by the way, dell/vmware.
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look, how can we kind of square this circle and get some liquidity and try to rationalize a couple that don't fit elsewhere, that's what seems to be going on. i don't think it's about corporate impaeratives or business logic. >> if we get -- we're doing an hour on it because i want to know why no one wants to go public i was going to ask you what it means for starting off the year with all of these deals? we've had a ton of deals announced so far. >> companies have a lot of cash. after the tax reform they only have more cash now, so you know, they have to find something to do with it it's either return it tore shareholders, pay their employees or do m&a. we're seeing a combination of all three. getting back to the utility sector there, it's typical, again, when rates rise, utilities go up. this death cross talk for indices, it's a lot less ominous than the name suggests actually following prior periods
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where we've seen this type of occurrence, utilities have actually put up better than average returns over the following three to six months. so, they're already down a lot, so, i mean, you could see a bounce in the group here especially with rates becoming stretched as well. >> that's an excellent point i mean, some context we do talk a lot about these kinds of metrics - >> it's another way of saying it's down a lot in a short period of time if you think that's oversold, that might be an opportunity if it's not something obviously for an individual stock, it could be in freefall, but for a sector it probably means the ebb and flow of money. >> let's talk about something that's been up a lot, even after today's pullback, what is a meltup is this defined as one >> there's nothing in terms of a formal definition of this, but everyone's been talking about it i do think it's basically when the market accelerates higher off an already high level, which we've seen right here. this is from the folks at fund
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stretch showing how we accelerated at this blistering pace coming into this month. now, what happens after this period when you had virtually no pullbacks? it's a phase of the market that usually does not mean when this phase ends the bull market is over what it usually means is very strong underlying demand for stocks that somehow carries through. i think the risk here is that we have this oversaturation of good economic news and very positive sentiment, and it creates a choppier environment coming after. and you have more fullbacks. but it usually is not the ultimate high. basically above average returns or average returns going forward, but not as smooth a ride. >> it's a good looking chart it's from fund strap. >> i saw that. >> very interesting chart. it was a great chart >> would you echo that in terms of what is or isn't a meltup and what the risk of that is >> i think a big concern on the part of money managers is being
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left holding the bag when the market turns down. they're constantly looking over their shoulder like today, is this the beginning of something bigger? you look at the internals of the market we have high yield spreads at cycle lows, percentage of stocks hitting new highs routinely over 20% in the s&p 500 there's really not any divergences underneath the surface. i mean, what could drive the market lower maybe an external shock but it's hard to game those the point mike was saying is after these prior periods where we've seen these big returns, you have seen increased choppiness but, you know, average or better than average returns but just the fear is that people don't want to be left holding the bag. and that -- that causes them to be more cautious >> for people that don't want to worry about every twist and turn in the market are saying, okay, how do i just pick smart stuff and i'm able to drown out the
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noise? can you still do that with a pretty concentrated portfolio? >> yeah, i think you can quickly -- i'll answer that but i'll toot paul's horn. this is the first time in ten years that all ten sectors have revised earnings up. that gives you a lot of opportunity to look around and find great companies that you can own for a lifetime these are usually companies raising their dividend pretty quickly and dramatically like 3m, 16% increase or like texas instruments, 25% increase. so, you can drown out -- you can ride out the noise when a company like texas instruments doesn't guide high enough and sells off. >> yeah, big move. >> paul, you can tad credit for that >> no, no, she's exactly right it's the first time in at least a decade analysts have been raising forecasts on every sector more than they've been lowering forecasts it's the first time we've seen that in ten years. it set the bar high coming into earnings season but so far companies have been reacting
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positively and earnings beat rate and revenue beat rates are nearest the high in ten years as well. >> it's a good nugget. we'll call you paul "nugget" hickey thank you for joining us appreciate it. we have more headlines out of washington on outgoing fbi director andrew mccabe eamon javers, what now >> reporter: new reporting from nbc news about the phone call between the president of the united states and andrew mccabe that took place on the day that the president fired james comey. nbc news reporting that the president wanted to fire james comey at a time when he was in california and he did not want comey to be able to use an fbi plane to fly back to washington. he thought all the trappings of the office should be removed from comey the instant the letter was delivered to headquarters, stranding comey effectively in california, leaving him to make his own way back to washington, d.c. nbc news reporting the president called andrew mccabe demanding
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to know why that didn't happen mccabe reportedly replied that he didn't specifically authorize comey to use the government plane but that he would have if anybody had asked him. nbc news saying the president was silent at that answer and then turned on mccabe suggesting he ask his wife how it feels to be a loser, an apparent reference to a failed campaign in west virginia that mccabe's wife made. how did mccabe respond to that nbc news says, he said, okay, sir, and the president hung up the telephone. a dramatic moment behind the scenes revealed by nbc news behind that phone call between the president and mccabe mccabe resigning effectively from the fbi he had been expected to leave the fbi later in the spring when he was eligible for his full retirement he'll be on leave and able to collect his full retirement. the white house not commenting
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referring all ept questions to the fbi saying the president didn't have any official volment in the decision-making surrounding mccabe's official departure from the fbi. >> dramatic tale there eamon javers at the white house. we have a news alert from jpmorgan seema modi, what's going on here >> this involves leadership. jpmorgan chase appointing daniel pinto and daniel smith as co-chief operating officers of the company. jpmorgan ceo jamie dimon says he'll stay on for five years the stock is unchanged after hours for now. back to you. >> thank you he just put five years out there, it sounds like. >> absolutely right. i think it's kind of unheard of, not just -- to say board of directors and i have agreed i will continue in my role for approximately five more years. i think this is probably an
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attempt to clear up any ongoing discussions about how much longer he may have at the helm gore man smith, as seema said, head of the retail bank, he's 61 and daniel pinto at 55 excuse me, gordon at 59. pinto at 55. they run the two biggest parts of the bank below jamie dimon and were the two most h e eir-apparent if anything were to happen to jamie dimon. they're promoting those two, making clear the power they have within the bank and at the same time jamie dimon saying he has five more years. >> now we're talking 18 years if he carries this out. criticism of late has been
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succession and how many lieutenants jpm has lost to other places because they saw the writing on the wall. they were not getting that ceo job. if nothing else, jamie dimon making it clear rights now he intends to stick around. >> i don't think it will quiet that talk simply as he said, these guys are of an age that it's not obvious one will be the successor if, in fact, jamie dimon stays the five years he says right now of course, i wonder if also putting five years out there is an attempt to quash the talk of running for president. >> there's a lot of parallels between him and bagram - >> they took over at the same time with igor he had an explicit departure date he keeps rolling forward. that's not the case with dimond. >> what is the significance of that, especially for two guys
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who now know that jamie dimon plans to stick around in the top job for some time? >> i think it's interesting. gordon smith, 59, in my reporting recently just before earnings season when we did a big piece on potential long-term successors for blankfein, one of the parts of the reporting is he wasn't desperate to become ceo this promotion is probably exactly what he was looking for. pinto head of the investment bank at 55 may still well have ambitions. assuming it's not the full five years for dimon at the helm, you could say it's the other way, these promotions keep these two happy in the meantime. then there's the other three members of the committee, marietta is head of the asset management arm, 50, doug, 52, and marianne lake, cfo, she's only 48. those other lieutenants probably aren't feeling a need to leave
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just simply because jamie dimon said five years. some of those past lieutenants you mentioned in the past that we may have anointed h eir-apparent in the media, they are older than the other bunch that's at jpmorgan i think the fact jamie is saying -- mr. dimon is saying five more years and the two eldest of those lieutenants are being promoted, it probably shows their commitment in the short term. >> that's agood point. wilf, thanks for joining us. jpmorgan shares are unchanged on the news. there's a lot more ahead on the "closing bell." >> announcer: next up, when the name on the front door gets in trouble, how much trouble is it for the people behind that door? more on wynn's big drop in the wake of allegations against their founder and ceo next plus, the president just did something very unrepublican-like that has an entire industry calling in anger
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a rare big downday on wall street it was pretty close to session lows and decline of 0.23 of 1% the transports were lower. the nasdaq composite lower the russell 2000s were down about ten points today to 1598 citigroup is the latest firm to raise its price target on amazon we'll get the "fast money" trade on how you should play that red hot stock ahead of its earnings. plus, the white house considering a move to nationalize the next generation of wireless. could it be a positive for telecom? the "closing bell" back in two hi, i'm bob harper,
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welcome back it's time for a news update with sue herera. >> here's what's happening at this hour. president trump lunching with members of the united nations security council at the white house. he strongly condemned the taliban's role in a recent string of deadly attacks in afghanistan. >> we'll also discuss what more we can do to defeat the taliban. i don't see any talking taking place. i don't think we're prepared to talk right now it's a whole different fight over there they're killing people left and right. >> here at home, a small plane made an emergency landing on long island's state park beach this morning an instructor and two junior
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teen pilots were on board. one of the students was piloting that plane they were all taken to a hospital for evaluation but everybody survived. and chief wahoo is being removed from the cleveland indians' uniform next year the polarizing mascot is coming off the team jersey sleeves and caps starting in the 2019 season the big-tooth smiling kashg ka tour has been used by the team since 1947 that is the news update this hour kelly, i will send it back downtown to you. >> there's still a chief yahoo, right? wasn't that what yang called himself? >> the company or -- >> yeah. >> i think right now all attention turns to the washington redskins. >> oh, there you go. >> they're the next on the list. we'll see what happens with that controversy. >> thank you, sue. axios saying president trump's national security.
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all fcc commissioners put out a statement oat posing the idea. the administration significant named the goal would be to protect the u.s. from china and army of hackers. marc grossman is with us to talk about this along with jonathan spalter, president and ceo of u.s. telecom, an associated of telco businesses thank you for joining us jonathan, i assume you are vehemently opposed to this because the technology companies are doing the investment themselves what do you make of this announcement >> the quickest way we can put the brakes on the hard momentum that u.s. broadband providers have in the global race to win in the 5g marathon is to federalize these networks. you know, trillion and a half dollars have been spent by broadband networks that's more than was spent on the interstate highway system and sending a man to the moon combined let american companies innovate, invest and lead.
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that's what we really need to do not have the federal government take over our networks >> marc, can the federal government actually do something like this? >> amazingly, they could the power of eminent domain is really broad goes back to kings, giveth taketh you layer on that the inherent power when it comes to power of national security. yes, they could. there's no doubt the power exists. >> so maybe they could justify a move in that way, but if there's huge pushback by the telecom industries, what would happen? >> you ask me could it happen, the power is there, yes. politically, will this happen? this is a stril balloon that's -- the bubble is going to burst and fall to the ground nothing more, nothing less trump's controlled fcc came out almost instantly reminds me of the immigration ban.
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hss was like, there's an immigration ban? whi when did that happen >> let's say this does not go any further. do you think there's going to be an imperative by the government to say, we need to have some kind of secure part of the spectrum or network or something like that, have to have some assurances from the industry that, in fact, this is going to be safe in some respect? and is the industry prepared to assure that? >> oh, absolutely. we absolutely require security resiliency of our networks not just our current networks but next generation of networks. our innovators are working hard every day to make that happen. it's a great thing the federal government wants to play a role, an assertive role in helping the u.s. to lead in the role of 5g but it's not to run the networks themselves it's to lower the barrier for investment to create incentive for our companies to win this race that's what we'll be striving
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for in the days ahead. >> guys, thank you breaking news. jonathan and marc grossman on the eyebrow-raising story of the day. how about this one breaking news on met life. shares are lower what's happening >> that's right. metlife preannouncing preliminary fourth quarter 2017 earnings and rescheduling the earnings release and conference call, which had been scheduled to happen after the bell on wednesday. then that call this upcoming thursday morning now, the company says this seems to be tied to a reserve charge in the group annuity business. management of the company has determined the prior release of group annuity reserves resulted from internal weakness what that means, metlife expects to increase reserves in total between 525 and 575 million pre-tax to adjust for reserves previously released as well as accrued interest in other related liabilities. what that means, that is an impact to the fourth quarter 2017 net income of 135 to $165
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million pretax adjusted, what it means, the company is expected to report earnings of 61 to 66 cents that is far below the $1.08 estimates that are expected from the street that's why you're seeing shares down 7% right now. they were down as much as 10% in the after-hours trade. volume seems to be picking up here last thing i would note, they have rescheduled their conference call and web cast for february 14th. they're pushing it back about two weeks from 8:00 to 9:00 a.m. eastern. back over to you >> morgan, thank you the shares are down nearly 8%. mike, you could point to a number of reasons why, but any time you see weakness and internal controls, financial reporting, annuity accounting issues, not to mention pushing back the earnings. >> absolutely. i don't know if this is about a heightened level of scrutiny among auditors or regulators that this kind of reserve accounting is echoes a little what ge had to deal with in terms of long-term impact of accrual accounting and the rest of it.
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so, you know, i don't know if it's just about this particular episode. the reason you sell first, because it's certainly unexpected and often it impacts what previous year's earnings were and were not. >> i'm trying to think of others in the space we talked about some challenges there and actually the lack of participation because the -- forget even whatever may be happening with the accounting. the business itself has been no good prudential shares down about 1% after hours, for example looking at some other insurance names. met down 8%. i believe they're still trying to fight the regulator to make sure they're not a - >> that already happens. basically the regulators backed off that seems even prudential will escape that. >> metlife down 8.5% and they'll not be reporting q4 earnings as expected. amazon shares are up 22% this year. up next, "fast money" traders tell us whether that rally is just getting started, which is hard to believe.
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s. welcome back to "closing bell." take a look at rambus reporting in line with estimate but revenue guidances almost half of what estimates were calling for. this might be due to a new accounting rules that were adopted. right now we're looking at shares off session lows. still down about 4% here in after-hours. kelly? >> thank you, seema. seema modi. now let's get to other big stories of the day in our rapid recap. as the month heads into the home stretch, s&p the best. >> a dr. pepper/snapple and keurig/green mountain are merging. this transaction worth about $11 billion in what they're calling combined pro forma revenues. >> it's for our consumers, our partners we talk about being a total beverage solution. this was the perfect avenue to
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take us to where we're not only in cold beverages but also in hot beverages. >> the board of directors of wynn resorts is launching its own investigation into the allegations against steve wynn. >> republican national committee now has accepted steve wynn's resignation as finance chair. >> apple shares cutting iphone production in half, according to japan's nikkei news service. >> sources are telling me it's possible dell will consider a reverse merger with vmware. >> the action is really in the bond market today where yields are soaring. the two-year at its highest level since the beginning of the financial crisis. >> dow dropped 180 on the bell could still be moving around we'll keep an eye on it. that's more than 0.23 of 1%. exact same proportion to the s&p today. >> citi named amazon as top stock pick, raised the price target from $1600 to $1400 the boost they say could come
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from amazon's ad business. ad revenue $10 billion in 2017 i assume according to citi's analysis, could be as much as $50 billion in a decade. joining me with more, cnbc's "fast money" trader steve grasso and brian kelly. hey, guys. >> hey, how are you? >> peachy. listen, let's talk about this price target also, brian, what do you think about the fact that, you know, it hits 14 so raises it to 16. is there a strong basis for this >> it's not like this snuck up on anybody they had $10 billion ad revenue last year. this isn't anything new. to me it felt more like an excuse for an upgrade. i get it you want to get your price target up there. perhaps this was undiscovered at the very least maybe this was underappreciated but it didn't feel like any new news coming out. here's the thing, it worked. stock was up amazon gets that pass. it worked. >> steve at the same sometime we had people in there talking
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about they have to break the ad duopoly of amazon and google maybe will take the regulatory heat off it. >> when you amazon, this stock i've been in and out of. it goes thrown off to the side when we talk about valuation we're no longer talking about valuation. we're talking about growth they own basically the retail community. now with groceries they'll be there as well. they're in cloud they own streaming, their own little nook. this is something people buy, keep buying. to your point about the price target, these are going to be ratcheted up people don't want to play catch-up it's still a buy. >> it's had a good year. it's up 22% in how many -- what have we had, 20 trading days >> it's a fascinating setup in sentiment. everybody on the street has a buy on it, but half of all the price targets are below where it's trading right now. >> wow. >> i think it's just a natural response the analyst has a $1400 target
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it got there the obvious question is, what do you do now, buy it or sell it? if you say buy it or hold it - >> you have some justification. >> look, you could always plug in various assumptions and leverage because the stock does not trade as we know penny for penny on earnings per share. >> it's not about a value play every time you get fooled into thinking it's a value play, you're wrong it's a momentum play they can turn the spigot on and off when they want. >> if it's momentum, why are we even reading the analyst research anyway? thank you for joining us steve grasso, brian kelly, much more coming up on "fast money" at 5:00 p.m. eastern. we have a news alert on revlon a busy hour. seema, what's happening there? >> revlon ceo is stepping down fabian garcia stepping down to pursue other opportunities we saw shares of revlon underperform, down about 4% in the regular session. it's been a tough year
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shares are down about 33% over the past 12 months kelly? >> seema, thank you. this comes today as avon is trying to figure itself out. music streaming services will have to pay up to songwriters and publishers that's next.
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is pushing the new new york forward. we're the number one dairy and apple producers in the eastern united states supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov welcome back time now for our takeaway today. we begin with the u.s. slapping a big increase on the amount of royalties that streaming companies must pay out to music
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publishers and songwriters the copyright royalty will force them to pay outer 15.1% up from 10.5%, and that's to owners like sony who pay it out to artists you think they have to look too pay more, look to the shares pandora were up 4% spotify is not public so we can't check. i thought there would be a bigger hit. >> pandora, the stock is already at a deep low before this actually happened. two, the majority of pandora's business is a digital radio type business it's ad supported. these higher royalties don't apply to that business they don't apply to that kind of - >> only on-demand streaming? >> on-demand. >> you couldn't look to apple shares today we couldn't look - >> it's going to disappear inside those. >> if that's the case, there's nowhere to look to the pains, they might as well increase it to 40% - >> i think apple would feel it and not love it. spotify certainly would.
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>> they lobbied against it. >> there's all this about how much you track - >> i'm sure the artists are happy today post-grammys. as people keep scratching their heads about the dollar's weakness, it's weak because people keep buying foreign stocks they say investors have taken $20 billion out of u.s. equities since last january and putting $100 billion into europe and japan. what do you make of this argument >> it definitely reflects the broader trend. it's a contributing factor, without a doubt. i don't think of it as u.s. investors sending money out of the country. it's happening globally. i think of -- let's say one investor owned all financial assets in the world. when they feel like the world is growing well, they want to invest in the faster moving -- >> more from the u.s. >> if you're from a global basis, the u.s. is the defensive kind of quality play. >> that's true. >> that's not where you get the money when everything is going great. >> i look at the -- i don't know
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if anything explains the weakness it's head-scratching, that's all it is. we'll see if it continues. finally, what is elon musk up to? why is he selling flame throwers i don't mean he -- elsaid he sold flamethrowers next. what is elon musk really up to with this stunt? >> beyond it being a stunt, i don't know i think it's one of those things -- he seems to want to kind of stay in front of people. >> court the attention. >> for all his variety metrics it started as a gag and people took him up on it, called his bluff. he's running a one-man qvc operation -- >> but the biggest thing he's trying to sell is shares of tesla. i think it keeps him buzzy, cool. >> he's always doing the next thing. >> he's the flamethrower guy now. i don't even know if they're legal. >> legal up to ten feet. >> seriously, you know that? >> that's what it said. >> okay.
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please don't get one. tax season is upon us. with the new tax reforms in place, some are turning to experts to handle these returns. how to find the right accountant is next. coming up on "fast money," a strategist says forget bitcoin there's been a great rotation in teceouantoaypa y wt p atntion to instead o [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ] ♪ good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours.
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talk to one today and see why we're bullish on the future. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.
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welcome back. sorry to say tax season gets its official started to. the irs is beginning to accept individual returns and the agency is expecting 155 million this year. if you want to get' jump start but need help and who doesn't especially this children, sharon is here with some tips. >> kelly, move of the recent changes to the tax code won't go into effect until this year and
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so they won't impact your 2017 tax return. but it's always important to get organized and if you don't want to do your own taxes you need to make sure to hire a professional who has the proper cre chen chalz and expertise. what is your ptin, that's the preparer tax identification number and without one, they can't sign off on your return. make sure to ask for credentials, a certified public accountant or cpa must know about taxes and auditing. they must know about all will these to get the designation. there's the enrolled agent or ea and that person is tested on their knowledge of tax laws and earns their designation from the irs. a lot of the -- you also want to find out if your tax preparer will be available year-round because you may want to be able to go back in the fall or winter and do some year-end tax planning especially this year. now unfortunately tax season can become scam season. the irs lists about several red
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flags that you need to watch out for and couple of them include staying away from tax preparers who claim they can get you a bigger refund than anyone else. also avoid anyone who wants to tie their fees to a percentage of your refund and never agree to let a tax preparer deposit all or part of your refund into their financial account in order to pay the fee. that is a big no. >> i'm still trying to separate who does what here and in the meantime, sharon, i wonder how people are going to react feeling so good about their 401(k) plans "the washington post" has the story about there's more and more people borrowing from their 401(k) not because they need too but because it will elbe replenished. >> this is not an apples and apples exodus. you're taking this money out of your 401(k) unless you're over 59 and a half and your paying taxes on this money on your traditional 401(k) and you're also paying an early withdraw penalty. if you're taking out $20,000, you're not really getting
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$20,000 to usefor your own so really think generally taking money out of your 401(k), borrowing from your 401(k) before you're eligible to it is really a bad idea. the good news a lot of people are saving a lot more. they're balances are going up because the market's been so good but they're also contributing more to the 401(k) than they have in about ten years that's according to fidelity. we're also seeing the number of 401(k) millionaires at the highest we've seen. 133,000 at the end of the third quarter in 2017. so we're seeing significant gains for people in their own balances and in their contributing to their retirement accounts. that's great. just make sure to have another account where you can dip into more easily, a taxable account or savings account that's more liquid. >> that's a great point. again, hopefully some help for people trying to figureout these tax returns in the meantime. thank you very much. >> sure. we got some big tech names reporting earnings this week. will preview the results from
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apple, amazon and all the rest right after this. here? doing we're voya. we stay with you to and through retirement. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement.
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hey maya. what's up? hey! so listen, i was taking another look at your overall financial strategy. you still thinking about opening your own shop? every day. i think there are some ways to help keep you on track. and closer to home. i'm all ears. how did edward jones grow to a trillion dollars in assets under care? thanks. by thinking about your goals as much as you do. (nadia white) the moment a fish is pulled out from the water, it's a race against time. and keeping it in the right conditions is the best way to get that fish to your plate safely. (dane chauvel) sometimes the product arrives, and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred.
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bell. we went out on the low. the s&p down about 19 there. the nasdaq as you see down half a percent. russell down a similar amount. two-thirds decline or all the averages. this ahead of the president's state of the union tomorrow night and speaking of which, looks like congress made a little mistake on the tickets. >> let's just say this union could have been more perfect were it spelled correctly. the tickets for tomorrow night's primetime address the first in donald trump's presidency union with an m at the end. the sergeant at arms office the tickets have been corrected and reprinted and redistributed before tomorrow night but not before some lawmakers got a laugh at the error. he's looking forward to the state of the uniom. democrats predicted the many misspellings from the word nor may, theresa may misspelled or of course covfefe from trump's
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own twitter feed but this error happened on the other end of pennsylvania avenue and will be corrected before tomorrow. kelly? >> i've never made a spelling error in my life so i don't know what that's like. we're all human. thank you. it's going to be a busy week for earnings. me and mike are here to look at the calendar and some of the big names coming up. >> i think wednesday is your funday because you have your industrial momentum name at boeing which nothing makes -- >> we just talked about boeing's multiple was higher than facebook's recently. >> exactly. boeing's forward multiple is higher than facebook and facebook will have a lot to change about changes in the news feed and all the rest of it. it's more of a controversial than it used to be. >> microsoft too they have stayed out of the lime light with this one. >> that's right. linkedin was one of those -- i'm going to turn cash into something and maybe they'll be an update here with take a on time warner.
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>> alphabet it's a clock work type company. the earns just come. be interesting to see what they have to say about the ad market. a lot of this controversy about measurement and all the rest of it in digital ad. >> alibaba, the one worth looking through, they offered in english. "fast money" starts now. it does. thank you very much. melissa has a well deserved day off. i'm brian sullivan. your traders on the desk tonight, steve see more, brian kelly and dan nathan now's diversity. the scandal rocking las vegas. also hammering investors, wynn resorts dropping nearly 20% since that bombshell came out. plus, one top strategist calling it the great crypto rotation and that could have bitcoin back in the saddle again. tom lee will be here to explain. all that

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